Brent: Geopolitical risk premium builds – ING
ING strategists Warren Patterson and Ewa Manthey note ICE Brent surged 4% to just above $113/bbl as markets focus on supply risks rather than current fundamentals. They highlight growing concern over renewed US–Iran tensions in the Persian Gulf and question their earlier forecast that Brent would average $80/bbl in 4Q26, with a persistent geopolitical risk premium likely in prices.
Brent jumps on US–Iran tensions
"Oil prices surged yesterday, with front-month ICE Brent settling 4% higher at just above $113/bbl. The rally is being driven less by current fundamentals than by mounting supply concerns. Markets are increasingly worried about renewed escalation in the Persian Gulf, a scenario that could threaten oil flows that have so far remained remarkably resilient."
"Reports suggest President Trump is considering fresh strikes on Iran, while the US is reinforcing its military presence in the region with the deployment of a second aircraft carrier. Meanwhile, there are reports that US troops have been evacuated from some bases in the Middle East. Clearly, these developments don’t paint an optimistic picture."
"They call into question our long-held view that the US midterm elections would bring de-escalation and normalisation in flows and oil prices. If anything, re-escalation seems the most likely path. As a result, our expectation that ICE Brent would average $80/bbl over 4Q26 is looking unattainable."
"Even if tensions don't re-escalate, the mere possibility is likely to keep a sizeable geopolitical risk premium embedded in prices."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Don't be scared by the Nvidia turmoil and election noise! Morgan Stanley: AI turbulence does not change the main driver of the bull market, long-term outlook remains "extremely bullish"
The Chief Investment Officer of Morgan Stanley Wealth Management stated that management turmoil at Nvidia and the Democratic Party's victory in the midterm elections have further heightened market concerns about the AI sector. However, these factors will not shake the core driving force of this bull market—capital expenditure on AI infrastructure.
After Jensen's resignation, the "Big Short" doubles down on shorting tech stocks! Warns the AI boom may turn into a "bull trap"
Michael Burry increased his short positions following Huang Renxun's resignation. He compared Nasdaq’s October peak to the top of the 2000 internet bubble. On November 12th, he doubled his put option positions on the Nasdaq 100, with expiry set for early 2027, and rebuilt put options on the VanEck Semiconductor Index. He directly warned investors to "exit the market" and predicted a significant correction in chip stocks before mid-2027.
Tesla (TSLA.US) Cybercab limited pre-orders open: priced at $29,990, with an additional monthly operating fee of $299
According to reports, Tesla has invited select customers to reserve the Cybercab, taking a step toward launching this self-driving model to general consumers.
Fed Vice Chair Sets the Tone: Inflation Is the "Most Important Signal," Interest Rate Decisions Depend on It
Federal Reserve Vice Chair Philip Jefferson stated that when policymakers consider whether to raise interest rates further, inflation has become the most important metric.
Crypto prices
More
